investment-grade

Investment Grade

Describing a bond with a medium or high rating. Bonds rated Baa3 by Moody's or BBB- by S&P or Fitch. Investment-grade bonds are considered sufficiently low-risk that the law allows banks to invest in them. In addition to being low-risk, investment-grade bonds are low-return, greatly reducing the cost on the issuer. Most American Treasury and municipal bonds are investment-grade. See also: Junk, High-Rating.

investment-grade

Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. Also called bank-grade. Compare high-grade.

Following promising second quarter results when the par value of bonds affected by upgrades exceeded downgrades for the first time since before the recession, the third quarter's results were hampered by weakness in the investment-grade sector.

As a result, an investment-grade security supported by an eligible liquidity facility may, in fact, pose more risk than the risk commensurate with its rating because the potential loss to CP investors would occur when the security migrates to a non-investment grade rating and prior to the security's default.

Core Investment Grade Bond Trust I are pass-through certificates representing direct ownership in a static, unlevered portfolio of 22 investment-grade corporate bonds with a final maturity of either Nov.

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